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Saturday, 30 November 2013

10 REASONS WHY YOU'LL NEVER BE RICH

You don't have to inherit money, win the lottery, or
even be the next Bill Gates or Warren Buffett to become financially secure.
With a little bit of knowledge and a lot of hard work and discipline, almost
anyone can accumulate sufficient wealth -- and perhaps even great wealth -- to
enjoy the creature comforts of life.

But how do you get ahead if you're living paycheck to
paycheck? The fact is, no matter how much you earn you could be creating your
own barriers to financial success without even knowing it. Here are ten things
you might be doing that are preventing you from achieving prosperity. Change
your ways and you could find yourself well on the way down the road to riches.

1, You Buy High and Sell Low: Does this sound like your investing strategy? You hear
about a stock that is soaring, and you want to get in on the action, so you
impulsively buy. But soon after, the stock starts tanking. You can't bear the
pain of watching your shares decline further in value, so you immediately sell
at a loss. As a result, you're wasting money rather than building wealth. Unfortunately,
many investors buy high and sell low because they follow the herd blindly into
the latest hot stock. You can resist the urge to go with the crowd if you
adhere to smart investing techniques. One such technique is dollar-cost
averaging, a simple system of investing at regular intervals no matter what the
market is doing. While it doesn't guarantee success, it does eliminate the
likelihood that you're always buying at the top -- plus, it takes the guesswork
and emotion out of investing.

2, You Buy Everything New: New stuff is nice, but it's often not the best
investment. Take cars. Estimates vary, but some experts say a new vehicle loses
30% of its value within the first two years -- including an immediate drop as
soon as you drive off the dealer's lot. According to Kelley Blue Book, the
average vehicle is worth 44% less after five years. If you're not
comfortable buying something that someone else has owned, get over your hang-up
because you're missing a big money-saving opportunity. Many pre-owned items can
cost up to 50% to 75% less than the price you'd pay if you purchased them new.

3, You Carry Too Much Debt: Americans have $846.9 billion in credit card debt
alone. That's $7,050 per household, according to NerdWallet.com, a Web site
that analyzes financial products and data. If you're only making minimum
monthly payments on $7,050, it'll take 28 years and cost you $10,663 in
interest before you're debt-free, assuming a 15% interest rate. And that only
holds true if you don't make any additional charges. Some debts can lead to financial success -- a mortgage
to purchase real estate, a credit line to start a business or a student loan to
fund a college education -- but a high-interest credit card balance usually
doesn't. Pay down credit cards with the steepest rates as quickly as possible.
Putting $250 per month toward that same $7,050 debt will retire it in three
years and save you about $9,000 in interest versus making minimum payments.

4, You Pay Too Many Fees: Late fees, banking fees, credit-card fees -- the
amounts might seem insignificant when taken individually. After all, an overdue
library book or Redbox DVD might only run you a dollar. But if you're regularly
paying penalties and fees, these charges can quickly eat a hole in your budget.
Consider this: The average bank overdraft fee is $32.20, according to Bankrate.com,
and the average charge for going outside your ATM network is $4.13.
Late-payment penalties for credit cards can climb as high as $35. So how do you avoid pesky fees? Read the fine print so
you understand fee rules, and stay organized so you avoid breaching those
rules.

5, You Pass Up Free Money: Would you ignore a hundred-dollar bill on the
sidewalk? Of course not. You'd bend over and pick it up. So why are you passing
up other opportunities to get free money? If your employer matches employee
contributions to a 401(k) but you're not participating in the retirement plan,
then you're passing up free money. If you let rewards points from loyalty
programs or credit cards expire, then you're passing up free money. If you
claim the standard deduction on your tax return when you qualify for itemized
deductions that could lower your tax bill even more, then you're passing up
free money. Believe it or not, there might even be free money out
there that you forgot about -- or never knew of in the first place. There are
more than $41 billion worth of unclaimed assets ranging from old tax refunds
and paychecks to forgotten stocks and certificates of deposit being held by
state agencies, according to the National Association of Unclaimed Property
Administrators.

6, You Neglect Retirement: It's easy to focus on the present -- the bills you
have to pay, the things you want to buy -- and assume you'll have time in the
future to start saving for retirement. But the longer you wait, the tougher it
will be to amass a sufficiently large nest egg. For example, if you wait until
you are 35 to start saving for retirement, you'll have to set aside $671 a
month to reach $1 million by age 65 (assuming an 8% annual return). But if you
start at age 25, you'll need to save just $286 a month to hit $1 million by the
time you're 65.Even if you're creeping closer to retirement, it's not too late
to start putting away money.

7,You Spend Too Much: Plenty of Americans live beyond their means but don't
even realize it. A 2012 Country Financial survey found that more than one-half
of respondents (52%) said their monthly spending exceeded their income at least
a few months a year. Yet only 9% of respondents said their lifestyle was more
than they could afford. Of the 52% who routinely overspend, 36% finance the
shortfall by dipping into savings; 22% use credit cards. Blowing your entire paycheck (and then some) each
month isn't an ingredient in the recipe for financial success. Neither is
draining your savings or running up card balances. To rein in spending, start
by tracking where the money goes every month. Try to zero in on nonessential
areas where you can cut back. Then create a realistic budget that ensures you
have enough to pay the bills as well as enough for contributions to such things
as a retirement account and a rainy-day fund.

8, You Save Too Little: If you're like most folks, your savings habits could
use some improvement. The personal savings rate in the U.S. is just 4.9% of
disposable income, down from a high of 14.6% in 1975. Only about one-half of
Americans (54%) say they have a savings plan in place to meet specific goals,
according to a 2013 survey commissioned by America Saves, a group that
advocates for better saving habits. Saving needs to
be a priority in order to build wealth. Begin with an emergency fund that can
be tapped in the event of an illness, job loss or other unexpected calamity. A
2012 survey by the Financial Industry Regulatory Authority found that 56% of
individuals say they have not set aside even three months' worth of income to
handle financial emergencies. Once your emergency fund is well under way, you
can divert small amounts toward other goals, such as buying a home or paying
for college.

9, You Retire Too Early: An early retirement is a dream for many, but calling
it quits if you're too young has several potential drawbacks. For starters, you
could incur a 10% early-withdrawal penalty if you tap certain retirement
accounts, including 401(k)s and IRAs, before age 59½. (There are exceptions.)
You can claim Social Security as early as age 62, but your benefit will be
reduced by as much as 30% from what it would be if you wait until your full
retirement age, which falls between 66 and 67 depending on your year of birth.

10, You Don't Invest in Yourself: This might be
the single biggest obstacle on your path to riches. If you're not investing in
continuing education, training and personal development, you're limiting your
ability to make more money in the future. "Your own earning power--rooted
in your education and job skills--is the most valuable asset you'll ever own,
and it can't be wiped out in a market crash," writes Kiplinger'